Valuation, sentiment, and SP direction

Detailed discussion of Soco's assets should take place on other threads, but this thread is to discuss the latest valuations both by ourselves and analysts, sentiment (ie will the shares go nowhere because there's not much upcoming news) and likely moves in the share price in the next six months. How should the shares be valued? How reasonable is it that any drilling without a firm commitment further than several months away is ignored by the market?

I haven't seen many recent analysts' reports on Soco, but I have one from Cazenove with a core NAV of 1370p and no doubt considerable explo NAV on top of that. I imagine that's approximately concensus, but maybe with crude rising again these concensus NAV figures will start to rise. Has anyone any other recent broker estimates?

My view, as stated elsewhere, remains that in the absence of much to get the market excited the shares will wander aimlessly for the rest of 2009. I've previously guessed that if crude were $65 at Christmas 09, then Soco's SP would be somewhere near £13 then, and I'm still very happy with that guess. What does anyone else think?

Of course unexpected bids and other events may overtake this, but these sort of events may happen to any company, and perhaps Soco (where management seem unlikely to accept bids since they believe there is considerable value not recognised by the market) is one of the less likely companies to be affected by the unexpected. The key new news for Soco might be (a) a bid (IMO unlikely), (b) some sort of presentation by management of the drilling data they claim to have that demonstrates a significant strike has been made at E, currently ignored by the mkt, or (c) possibly hitting oil off the Congo.

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SOCO International plc (SOCO) is an oil and gas exploration and production company. The Company's segments include South East Asia and Africa. It has field development and production interests in Vietnam, and exploration and appraisal interests in the Republic of Congo (Brazzaville) and Angola. In Vietnam, SOCO's Block 16-1 and Block 9-2 include the Te Giac Trang and Ca Ngu Vang Fields, which are located in shallow water in the Cuu Long Basin, near the Bach Ho Field. SOCO holds working interest in Block 16-1 and Block 9-2 through its subsidiaries, SOCO Vietnam Ltd and OPECO Vietnam Limited. SOCO holds its interests in the Marine XI Block, located offshore Congo (Brazzaville) in the shallow water Lower Congo Basin, through its subsidiary, SOCO EPC. SOCO holds working interest in the Mer Profonde Sud Block, offshore Congo (Brazzaville) through its subsidiary, SOCO Congo BEX Limited. SOCO's subsidiary, SOCO Cabinda Limited, holds participation interests in the Cabinda North Block. more »

ISTM that they want to get the extension finished and the lounge painted before they call the estate agents in no doubt.

However everything is for sale it's just the price. Actually its not his to sell it belongs to the shareholders - although he certainly has a lot of influence. I doubt if a decent bid was made he'd stand in its way though.

Although its annoying to see the share price below what we think the assets are worth its probably better to have our wealth in an inflation proof asset rather than cash while the money printing presses of the world crank out more and more dollars to inflate away excessive debts.

Detailed discussion of Soco's assets should take place on other threads, but this thread is to discuss the latest valuations both by ourselves and analysts, sentiment (ie will the shares go nowhere because there's not much upcoming news) and likely moves in the share price in the next six months. How should the shares be valued? How reasonable is it that any drilling without a firm commitment further than several months away is ignored by the market.

The thread has been read by 136,940 investors however, the share price is half the price it was 5 years ago and is unmoved over the last two years.

I have not got a clue what it will do over the next year or two..up or down.

I have posted on the "The Next Coca Cola" thread with what I think is an outstanding growh share, yet over the past few weeks it has seen just 500 reads.

I completely agree, we need to sort out the reserves upgrade, prove connectivity, and get the production history needed. I'm not for a second suggesting that we'd announce SV is for sale before that, nor indeed before they speak to those they consider to be interested parties. All I'm saying is that once that's all done and we've added all the value we can, (ok maybe h5 drilling will take place in parallel), why not announce it's for sale, it worked for the neighbours, they got a good price, there might be some who we don't know about that might be tempted. No harm putting a bit of pressure on those that we think might be interested.

If we cannot get the price that the management is after, then time to consider some of the other ideas that have been discussed here. Including floating a proportion of SV on an exchange somewhere as an income stream.

If there are other ventures that come up, even in vietnam, they should take place outside of SV, so they can be sold seperately at a later date if need be.

I agree K but there are three things I can do with Soco. Buy/Sell/Hold I'd probably buy more at current prices if I thought the connectivity thesis was strong and/or they had plans to solve the FPSO bottleneck. I doubt I'd sell any here unless something spectacular came along to re-invest in so that leaves ermmm boring old Hold.

If things do start to look like getting unstuck on various fronts I'll reconsider but for now I'll just wait and see - a relatively low risk place to park cash.

If my coastal stake about the same size now as Soco is taken out I may look to re-invest in Soco but to be honest I prefer NKO or BG at current levels.

Although its annoying to see the share price below what we think the assets are worth its probably better to have our wealth in an inflation proof asset rather than cash while the money printing presses of the world crank out more and more dollars to inflate away excessive debts.

More or less the view that has led me to hold since the 2008 oil price reversal, FWIW. You never know when (to use the analogy that others have employed) there will be a knock on the door.

I think some time ago we compared Coastal and Soco as some were proposing at the time a switch from Soco to Coastal. (sorry can't find the post). I think at the time they were pretty even on a lot of metrics. It does look like the switch was justified though. Coastal have continued to peform well and today have provided 2013 guidance where they are targeting 30,000 bpd average production net to Coastal.

so far one has to acknowledge that horse was a better bet to put your money on.

Maybe so.....but I don't recall much discussion of the length of the race. Being ahead after 5 furlongs doesn't guarantee a win over a mile. Virtually all the recent 15% outperformance (since my July discussion at an OB with Rob) came in the first half of September - since when there has been nothing in it.

Do we know if the "special dividend in December" is still being considered? Ok then.... How about the reserves report timings? December, right? I suppose we still have the Marine XI spud, estimated "before the end of 2012".

Do we know if the "special dividend in December" is still being considered?

I can't recall anyone suggesting that such a dividend would be paid. They may very well indicate in December that something would be paid in the New Year, but I don't think anyone has suggested more than that.

Ok then.... How about the reserves report timings? December, right?

According to my diary it is only 27th November today. Reserves report, IMO, would be released on 6th or 10th December - or in the first week of Jan.....but there has been no commitment about release timing. They might hold on to it until the prelims date - but I doubt it.

RC in a Bloomberg interview: "Cagle said the company...will possibly consider a special dividend in December".

As I said...

I can't recall anyone suggesting that such a dividend would be paid. They may very well indicate in December that something would be paid in the New Year, but I don't think anyone has suggested more than that.

ie......."consider......in December"

I think it's reasonable to wonder what happened to this.

It would be "reasonable to wonder" if we get to early January without further comment.

Regarding the possibility of the payment of a special dividend in December (with a decision to be taken in early December?), it is worth noting this article in the FT today - which suggests that the fears over the fiscal cliff in the USA are driving record numbers of US companies to pay special dividends before the end of December.

In that context, it is relevant to note that the two senior execs on the Board are both US citizens, who will not be oblivious to the potential tax advantages of a payout in the next month.

IMO such considerations make the payment of a special dividend more likely than I'd thought (even though they have said nothing on it yet!).

Hi EE regarding the possible timelines around this I would imagine we would need to hear of any decission around this next week to enable an EGM with notice period etc then progress the payments to ensure they would be made this year.

TBH I'm not sure of the exact rules regarding special dividends. On a quick trawl, there are often EGMs - but then there are also often other matters involving restructurings, which can't be ruled out here either. The notice period for an EGM is 14 days, incidentally, per resolution 18 of the AGM. We'll see.

For reasons mentioned earlier, I still think announcing a reserves update with the prelims is quite plausible in the absence of any other catalyst in the meantime (such as M&A), which I think unlikely.

FWIW, just an opinion based on experience - I haven't attempted to extract any comment from the company on the matter.

Actually I don't think that they have ever made a separate announcement about reserves - or even included the reserves numbers with the prelims. The reserves numbers have been published in the Annual Report - and thats all.

I haven't attempted to extract any comment from the company on the matter.

Neither have I - for the good reason that I wouldn't expect to be told anything. I'm aware that some have enquired and that those enquiries haven't borne fruit. So I'm guessing. I'm guessing that the reserves update will be sufficiently material that it will warrant a separate announcement once it is finalised and approved and won't be buried in a larger announcement (unless that announcement deals with the future of the Vietnam assets).

All FWIW. It is all a guess at this juncture, especially over matters of precise timing (which is why, incidentally and IMO, the share price has tended recently to drift up towards the end of the week and fall back on Mondays).

well we're getting close to December, the last time I enquired I was told to expect the reserves update to be completed in December. I know others have been told early December, but as we have already seen these dates are fluid and they will want to get the right result even if it takes longer. So Realistically we could hear something in the next week or two, or as EE has suggested it might be the new year. I hope that the reserves review will be significant enough (in a good way), to warrant an announcement, which I would hope would lead to a significant re rating. Still I have Spanish blood and there, the gifts are bought in the new year by the kings, so if Santa doesn't bring us a gift, maybe the kings will oblidge.

is it too early to wish people merry christmas ? My little one has started decorating her room with a pink tree and christmas lights!